Don’t Blame Housing Shortage For High Property Prices.

According to new research, shortage of houses cannot be a cause for unaffordable property prices, as construction in new developing areas are keeping up with population growth nationally.

Wise Real Estate Advice examined that the construction of residential property and population over a three-year period, discovered that national supply was already at a higher level than expected.


Throughout the past three years, 676,067 new suburban houses were permitted, compared to 461,383 to the previous three years which ended in 2010” Mark Ribarsky, Head of Wise Real Estate Advice, Buyers Agent.

When putting everything into perspective, the record volume of new and improved dwellings in the national pipeline, the population growth of Australia over each of the three-year period was 1.063 and 1.164 million. “When looking at it in another way, the population growth was 100,000 less, however, we approved 200,000 more properties.

Ribarsky mentioned that some critics had ‘tangled’ the strong performance of Melbourne and Sydney’s property markets with shortage of properties, when in fact, approvals were at historic highs.

“Whilst many interest groups and parts of the community will strongly disagree with myself, conformation and evidence clearly does not support those accounts” he said.

“For example, when comparing first hand supply and population growth of 2016 to 2008 when the median house price in Sydney had only increased by 0.6 percent. Similarly, the population growth was the same, however there were twice as more new properties that were delivered in 2016”.

One thing is that, a stronger economy and consumer behaviour comes into play when interest rates are as low as they have ever been, which will increase buyer activity to the point where it is above the demand of population growth.”

“If we were to observe cities such as Perth, Brisbane and Adelaide we would be able to recognise what happens when the attitude of consumers is not as strong, while the levels of supply are high.”

“With house price continuing to grow strongly in Melbourne and Sydney, this all comes down to a number of factors,” according to Ribarsky, “however, a shortage of supply was not a contributing factor. Furthermore, with large amounts of new supply, Mark Ribarsky points out extremely uncertain rental growth in capital cities in five years.

“If there was a huge scarcity of housing in the market, rents would significantly increase each time a lease would expire, which is evident through research.”

When looking at housing supply pipeline, buyers advocate Mark Ribarsky discovers that across a number of regional cities in Australia are considerably tighter than other capital cities. With a more controlled housing supply and affordable properties, we have been investing in many regional cities that has potential growth. In 2013, majority of residential buildings that were built were units. Ribarsky pointed that ten years ago three out of ten properties that were officially recorded were apartments, however as of today, 1 out of 2 properties were recorded.

“In 2016, Canberra was on top of the list with 80 per cent of new properties were apartments, while Sydney had 70%, Brisbane with 58%, and 54% for Melbourne,” according to Ribarsky.

Official data indicates that when considering all capital cities in Australia, Hobart will have a shortage of supply for a couple of years. However, for rental return and capital growth, Hobart outperformed all the other capital cities in Australia for the year of June 2017. Overall research only suggest that Hobart will only continue to maintain its position for a few more years.

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Don't Blame Housing Shortage For High Property Prices.
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Don't Blame Housing Shortage For High Property Prices.
Wise Real Estate Advice examined construction of residential property over 3 years discovering that national supply was higher than usual.
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Wise Real Estate Advice
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